(c) If, in an action other than one for wrongful death, a settlement or judgment payment for periodic installments is entered and a person entitled to receive benefits for losses that do not terminate under subsection (a) under the settlement or judgment dies and is survived by one or more qualifying survivors, any periodic installments not yet due at the death must be shared equitably by those survivors. Amounts due each survivor may not exceed the survivor's economic loss resulting from the death. (d) "Qualifying survivor" means a person who, had the death been caused under circumstances giving rise to a cause of action for wrongful death, would have qualified as a beneficiary at the time of the death according to the law that would be applied in an action for wrongful death by the jurisdiction under which the issue of liability was resolved in entering the settlement or judgment payment for periodic

installments.

(3) An assignment of or an agreement to assign any right to periodic installments for future damages contained in a settlement or judgment entered under this Title is enforceable only as to amounts:

(a) to secure payment of alimony, maintenance, or child support;

(b) for the costs of products, services, or accommodations provided or to be provided by the assignee for medical or other health care; or (4) Periodic installments for future damages contained in a settlement or judgment entered under this Title for loss of earnings are exempt from garnishment, attachment, execution, and any other process or claim to the extent that wages or earnings are exempt under any applicable law. Except to the

extent that they may be assigned under

subparagraph (3), periodic installments for all other
future damages are exempt from garnishment,

attachment, execution and any other process or claim.
(5) The amount recovered for purposes of computing an
attorney contingent fee shall be based on the cost of
the annuity.

TOPICAL OUTLINE OF REMARKS OF SOL SCHREIBER

AT THE CONGRESSIONAL RESEARCH SERVICES'

BREAKFAST MEETING, WEDNESDAY, JULY 23, 1986 ON

"THE ORIGINS AND IMPLICATIONS OF CURRENT
INSURANCE/LIABILITY PROBLEMS

I.

Origins

Known Causes

1.

a.

2.

3.

b.

C.

d.

e

underpricing; unrealistic limits; seeking highinterest rates at any price

poor reserving practice

increasing insolvencies

mass withdrawal of foreign reinsurers

extensive and unprofitable diversification

f. failure to recognize changing social and legal
concepts

Unknown Causes

a. major financial dislocations in the domestic
insurance industry

b.

C.

d.

was there a collapse of the foreign reinsurance market

impact of mass tort litigation: Asbestos, Agent Orange, etc.

the underwriting 'crisis': is it due to a
"colossal conspiratorial fraud"; boycott;
conscious parallelism; pricing in a
non-competitive market

Changing Legal Concepts

a. expanding tortious liability theories

b.

the emerging constitutional and civil rights
claims

broadening of damage theories

C.

a

staffing inadequacies and the legal barriers
arising from interstate nature of liability
coverage

b.

C.

II. Implications

5.

6.

7.

the "edge of cliff" scenerio and state
guarantee funds

recent insurance-tort law experimentation by 40 state jurisdictions:

(i) insurance changes: prohibition on
mid-term cancellations and non-renewals;
rollback of rates; flex-rating; mandatory
joint underwriting associations for
high-risk lines; requirements that insurers
provide data on claims and awards by class

(ii) tort changes: caps on non-economic
damages; contraction of joint and several
liability; restricting use of experts;
limiting non-for-profit directors liabiity;
new Delaware law concerning directors'
liability and indemnification

(iii) movements in the states of Washington, California, Florida, New York, Massachusetts and Delaware

Present Market Conditions

a. lack of capacity: estimated $50 billion
shortfall;

b.

C.

d.

e.

critical need for financial infusion in the reinsurance areas: opening the doors for the entry of new players (e.g. banks) in limited reinsurance fields

non-availability of coverage for certain
classes and continued market contraction;
are insurers taking risk out of insurance
coverage; limited reentry of insurers in the
difficult lines of business

impact of the commercial picture upon personal lines (home, auto, etc. coverage)

forthcoming major litigation involving the terms of the new claims-made policy and restrictive coverage language

New Directions:

a.

emerging structures: risk retention;

offshore and domestic captives; formation of new reinsurers; municipal pooling

Financial Issues (new profit centers):

a.

impact of the Equity Investment forces: recent infusion of $8 billion of equity in the insurance field; predicted profits of $4 billion in 1986; $10 billion in 1987 and $14 billion in 1988

8.

9.

10.

b.

soundness of the pricing structure: are brokers, intermediaries, primary and excess carriers extracting too great a "piece of the pie" in the present non-competitive market

Critical Legal Areas

a.

product liability legislation: need to
incorporate

(i) alternative dispute resolution approaches
(ii) structured settlements, periodic
payments of judgments and counsel fees

(iii) reexamination of tort concepts:
multiple punitive damages; strict liability
for retailers and wholesalers; jurisdiction
over foreign manufacturers; failure to warn
and state-of-the-art controversies; caps on
non-economic damages - the Mass. and Wash.
experiments

d. directors and officers' coverage problems for the non-for-profit, small and new business segments

Possible Roles for the Federal Government

a.

b.

C.

d.

e.

g.

monitoring role: gathering data to determine
the true picture

regulatory role in the reinsurance and
off-shore captive areas

providing tax benefits for self and domestic captives

also

formation of federal insurance programs for
uninsurable risks, similar to crime,
political, flood and crop insurance
cf. Texas windstorm and Calif. brushfire
pools

products, drug (vaccine) medical malpractice
and mass tort legislation

will the application of the anti-trust law
to the insurance industry help? The
'drying-out' of anti-trust ligitation.

a two-tier regulation proposal: regional or
state for personal lines; national or
federal for business and professional lines

Philosophical Question of the Day: should the

QUESTION FOR MR. SOL SCHREIBER

BY SENATOR MITCH MCCONNELL

You stated that the liability standards for product sellers might result in non-recovery for some claimants if they are unable to bring into court a manufacturer from a distant

state or foreign country, but is it not true that the provision itself states that a product seller shall be subject to

liability as if it were a manufacturers if the manufacturer is not subject to service of process?

RESPONSE BY SOL SCHREIBER TO
QUESTION BY SENATOR MCCONNELL

The mere fact that the product seller will be subject to liability if a manufacturer is not subject to service of process will not work, in my judgment.

In the litigation arena the issue of whether

out-of-state or foreign manufacturers can be brought in to American courts is a very expensive and protracted process. The transactional costs are very high and, in many jurisdictions, the right to appeal such fundamental issues as service of process often delay the litigation for many years. In addition, the proposal suggests that the product seller may also be subject to liabilty if a claimant is unable to enforce a judgment against the manufacturer. This will also create serious delays and extraordinary costs. The provision does not require that a manufacturer make a showing of his ability to meet a judgment when he is first sued, thus, a case may be litigated for three to four years or longer and then the claimant will have to seek redress from the product seller. Will the courts require a new suit or will the seller be bound by the verdict?

I suggest that these will be real problems and create serious dislocations.